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TMI Blog2017 (9) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... t jurisdiction and void ab initio and deserve to be quashed as such, as the same is in respect of a closed assessment which has not abated and is made not on the basis of any incriminating material unearthed during the course of search ( i.e. not on the basis of any concealed material which was either not disclosed or was intended not to be disclosed ). Rather the addition is made to the normal income already assessed/disclosed and not in respect of any undisclosed income detected based on any incriminating material seized as a result of the search but by misinterpreting the provisions of law and ignoring the real income test and subjecting the impugned amounts to double taxation. 2. That, without prejudice to the above ground of appeal in any manner whatsoever, the learned CIT (A) has erred in law in not allowing the deletion of the impugned additions of Rs. 5,07,316.00 to the salary income of the assessee on the merits of the case. 3. That without prejudice to the above grounds of appeal, on the facts and in the circumstances of the case, a) the learned CIT (A), has erred in law in not deleting the charging of interest u/s 234A and, b) is not justified in law in not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, a) the learned CIT (A) has erred in law in not deleting the charging of interest u/s 234A and, b) is not justified in law in not deleting interest u/s 234B, c) is not justified in law in confirming charge of interest 244A." 5. As regards the legal issue in assessment years 2008-09 and 2009-10, we find that the issue is identical to the legal issue raised in assessment years 2007-08 and 2009-10 which has been decided by the ITAT Delhi 'C' Bench vide order dated 04.08.2017 for assessment years 2007-08 and 2010-11 in ITA Nos. 5303, 5306 & 5307/DEL/2014. Therefore, the order of the ITAT DEL 'C' bench in assessee's own case decided on 04.08.2017 shall be identically applicable in the present cases also. For the sake of convenience, the order of the ITAT 'C' Bench in assessee's own case is reproduced hereinbelow: 2. First, we take up the appeal of the assessee in ITA No. 5303/Del/2014 for assessment year 2007-08. The grounds raised are reproduced as under: "1. That, on the facts and in the circumstances of the case, the learned CIT (A) has erred in law in confirming the impugned addition of Rs. 2,35,951.00 in the salary income earned in a foreign domain and which is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were diversions at the source itself. The assessee submitted that the deductions had not been included in the salary income because they were never part of salaries and also the fact that pension was separately taxable as salary income at the time of receipt thereof as salary income, which would amount to taxing the same amount twice. According to the Assessing Officer, the salary due from the employer in the previous year was chargeable to tax in terms of section 15 of the Act and deductions specifically provided under section 16 of the Act were only allowable. The Assessing Officer held that the salary income accrued to the assessee and deduction made therefrom were in the nature of application of ncome. The Assessing Officer relied on the .decision of the Rajasthan High Court in the case of CIT Vs. Dr K L. Parekh 208 'ITR 695 wherein is held that contributions by the assessee to health scheme are not deductible from salary income: Accordingly the Assessing Officer added the deduction amount of CHF 6518/-, which amounted to Rs. 2,35,951/- on the basis of conversion rate of Rs. 36.20 per CHF 3.1 Before the Ld. CIT-A, the assessee challenged the jurisdiction of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of citizen at large, then it will constitute diversion of income. Similarly, in the case of insurance whether it is made for the direct benefit of the employee. In view of the above, I direct the Assessing Officer to examine whether cantonal tax, insurance and other deduction will directly benefit the employee if so, it is not diversion of income, if not then it is diversion of income. In case, it is diversion of income, addition should be deleted. As a result, this ground of appeal is partly allowed. " 3.5 Aggrieved, the assessee is in appeal before the Tribunal, raising the grounds as reproduced above. 4. In ground No. 1, the assessee challenged the validity of the assessment under section 153A of the Act. Before us, the learned counsel of the assessee submitted that on the date of search the assessment was already completed under section 143 (3) of the Act on 18/12/2009 and no assessment was pending for the year under consideration. He further submitted that no addition has been made on the basis of any incriminating material unearthed during the search. The learned counsel accordingly submitted that in view of the decision of the Hon'ble High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case which are identical to the assessment years 2007-08 and 2010-11 decided on 04.08.2017 that no assessment was pending has not been disputed by the ld. CIT-DR and the only dispute is with regard to the incriminating material and no addition in respect of unexplained jewellery has been made during the year and addition so made has already been deleted by the Tribunal for assessment year 2011-12 and accordingly, following the decision of the Hon'ble Delhi High Court in the case Kabul Chawla [supra] no addition could have been made in the year under consideration. Accordingly, the legal ground of the assessee in both the assessment years is allowed. 7. Since the legal ground is held to be in favour of the assessee that no addition could have been made during the year under consideration, the other grounds are held to be infructuous. Thus the appeals of the assessee in ITA Nos. 5308 & 5309/DEL/2014 are allowed. 8. As regards appeal in ITA No. 5310/DEL/2014 for assessment year 2010-11 is concerned, on identical issue, the appeal of the assessee has been decided in favour of the Revenue and the relevant decision in ITA No. 5306/DEL/2014 decided by the ITAT Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (Del). A perusal of decisions in the case of Gallotti Raoul reveals that the nature of deduction was in respect of social security contribution to social security organization formed under the statute for all French national regardless of type of remuneration. There is overriding title at the stage of earning point itself.. Similarly, in the case of NHK-Japan Broad Casting Vs. CIT 101 TTJ 292 (Delhi)-citizen tax paid never comes in the hands of the assesses and does not form part of the total income. Now, the type of deduction made by the employer in appellant's case are examined. As per salary certificate issued by M/s. SANLORENZOAG which is part of the paper book, the details are as under: - Gross Salary . 97499.95 Less: Statutory Liabilities includes Pension fund, fixed cantonal Tax and insurance 12525.55 84974.00 A perusal of the certificate issued by the employee reveals that the deductions are on following accounts.] 1. Pension fund 2. Fixed Cantonal Tax and 3. Insurance The case laws relied upon by the Ld. AR is in respect of social insurance deduction in case of all French National in the case Galloth Raoul and Citizen tax in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of pension and other deductions like Cantonal tax, insurance etc. Regarding the pension, the Ld. CIT-A held that it will give direct benefit to the employee as deduction cannot be called as diversion of income, accordingly upheld the addition in respect of deduction towards pension. Regarding the other deductions like cantonal tax, insurance etc, the Ld. CIT-A has directed the Assessing Officer to examine whether those deductions will directly benefit the employee and decide accordingly whether it is diversion of income. The ld. CIT-A has laid benefit test to determine the diversion of income and directed the AO to verify the facts and decide the matter accordingly. 14.6 In our opinion, finding of the Ld. CIT-A on the issue in dispute is well reasoned and no further interference on our part is required. Moreover, the finding of the Ld. CIT-A on the issue in dispute in assessment year 2011-12 has not been challenged by the assessee before the Tribunal. Thus, the rule of consistency also demands that assessee should not contest this issue on merit in other years. 14.7 In view of above discussion, we do not find any error in the order of the Ld. CIT-A on the issue in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of income. Accordingly, this ground of appeal /argument is dismissed. The assessing officer is directed to charge interest u/s 234B(1) on revised income after giving effect to this order as per law." 15.4 In our opinion, the finding of the Ld. CIT-(A) are in accordance with the provisions of section 234B(1) of the Act and accordingly, he has directed the Assessing Officer to charge the interest under section 234B(1) of the Act on the revised income after giving effect of his order. We do not find any infirmity in the order of the Ld. CIT-(A) on the issue in dispute and accordingly, ground of the appeal is dismissed. 16. In result, the appeal of the assessee is dismissed." 9. Accordingly, since the facts and circumstances of the present case in hand are identical to those of the ITAT order dated 04.08.2017 [supra] respectfully following the same, we dismiss the grounds raised by the assessee. Therefore, the appeal of the assessee is dismissed. 10. In the result, the appeals of the assessee in ITA Nos. 5308 & 5309/DEL/2014 are allowed whereas the appeal in ITA No. 5310/DEL/2014 for assessment year 2010-11 stands dismissed. The order is pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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